Additional Details on CBP's 10+2 FAQ (Part III - Bonds)

CBP notes that its responses to the FAQs are for informational purposes only and are non-binding. Questions relating to specific facts and circumstances of a prospective transaction can be the subject of a ruling request under 19 CFR Part 177. CBP also states that it will be continually updating and clarifying its FAQ document as necessary.

This is Part III of a multi-part series of summaries detailing CBP's 10+2 FAQ document, and focuses on the FAQ section on bonds. (See ITT's Online Archives or 02/04/09 and 02/09/09 news, 09020410 and 09020915, for Parts I and II. See future issues for additional parts.)

Highlights of the FAQs include:

Bonds

Bonds for ISF purposes allowed, but not required until 2010. In response to a question on when will bonds, including the stand alone ISF bonds be required for ISF purposes, CBP answered that due to the structured review and flexible enforcement period, bonds will not be required until January 26, 2010. Therefore, ISFs may be filed during this period without obtaining a bond first. However, CBP is prepared to accept bond information in the ISF filing starting on January 26, 2009.

Activity Code 1, 2, 3, or 4 Continuous Bonds sufficient for ISF. In answer to a question on when would CBP require or allow the new ISF stand alone Continuous Bond to be used, CBP stated that if a party has an Activity Code 1, 2, 3 or 4 bond, they need do nothing further with regard to bonding requirements for purposes of submitting ISF information. CBP will accept either the CF-301 with one of the noted Activity Codes or a stand-alone ISF Continuous Bond.

Rider unnecessary as bond regulations are amended for ISF. One questioner asked: The Interim Final Regulations provide that every ISF Filer/Importer must have a Basic Importation Bond under which the principal agrees to comply with the new provisions of Part 149. To the extent that many ISF Filers/Importers have existing bonds, how does CBP intend to enforce this provision when the existing bonds do not contain this language?

CBP answered that all existing activity 1, 2, 3, and 4 bonds now contain this language. Riders are unnecessary.

New Continuous ISF Bond in interim final rule. In response to a question, CBP stated that Appendix D of the interim final rule contains the new Continuous stand alone ISF bond.

STBs allowed on case-by-case basis. In response to a question on whether a single transaction bond can be utilized for the ISF filing, CBP stated that use of single transaction bonds may be allowed on a case-by-case basis. CBP is currently in discussions with trade groups regarding the process for the use of a single transaction bond for an ISF filing.

One bond for the ISF filing, another for entry allowed (except for certain "unified filings"). If the ISF Importer and the importer of record on the entry are not the same party, CBP can accept one bond for the ISF filing and a second bond for entry. And that is true for continuous and single transaction bonds. However, if the ISF Importer and the Importer of Record are the same party and the ISF and entry are submitted to CBP via the same electronic transmission ("unified filing option"), that party must submit one bond for both ISF and entry purposes.

Breaches when an agent's bond is obligated for another party's ISF. Regarding a question on agents allowing their bonds to be obligated, CBP stated that if an agent is submitting an ISF on behalf of another party and the agent posts its bond, the agent agrees to have its bond charged if there are breaches of obligations regarding the filing. However, the ISF Importer remains ultimately liable for the complete, accurate, and timely ISF filing.

No plans to limit a broker's accumulation of liability for securing ISFs. One questioner asked, "Given the potential for rapid and substantial accumulation of liability, will CBP consider a prohibition or limit on customs brokers posting their bond(s) to secure the ISF? In response, CBP states that there is no current plan to impose such a prohibition or limit.

Written agreement when agent allows importer to use his bond. A questioner asked "how does the agent agree in writing to allow its bond to be used for an importer who doesn't have a bond, and is there draft language for such an "agreement"? CBP responds by stating that the written agreement could be a power of attorney or other similar document. It is necessary to make clear the authority to use the bond. CBP will not intervene in how this agreement is to be drawn up.

STB liability limit, Type 2 bond, FTZ bond, no exemptions. In response to several questions, CBP gave the following statements:

• CBP will issue guidance after discussion with interested trade groups on the limit of liability for an ISF single transaction bond.
• A custodial bond (Type 2) can be used for all of the ISF requirements.
• A FTZ bond can be used to file an ISF for a shipment that is not being entered into an FTZ.
• In response to a question on informal entries, CBP stated that the interim final rule does not provide for any exemptions to the bond requirements for the ISF.

Penalty assessment and mitigation guidelines to be issued. In response to a question quoting the interim final rule as stating "CBP will enforce the importers security filing, vessel stow plan, and container status message requirement, through the assessment of liquidated damages, in addition to penalties applicable under other provisions of law," CBP stated that the penalty statutes available to CBP include 19 USC 1595a(b) or 1436, depending upon the facts and circumstances of the violation. Penalty assessment and mitigation guidelines are being devised.

Different penalty regulations for Continuous Bonds and ISF Continuous Bonds. One commenter states "Additions to bond regulations for type 1, 2, 3, and 4 provide for liquidated damages in the amount of $5,000 per violation in the event of a default in connection with ISF filing requirements. However, the ISF stand alone Continuous Bond provides for payment of "any amount prescribed by law or regulation upon demand by CBP." Why is this provision different from the others?

CBP answered by stating that the provisions are different because the laws or regulations governing assessed amounts might change and the bond language will not need to be amended. The liquidated damages provisions of the activity code 1, 2, 3, and 4 bonds would govern.

(See ITT's Online Archives or 01/27/09 news, 09012710, for BP summary announcing the availability of the FAQ document and addressing CBP's answers to several FAQs regarding bonds.

See ITT's Online Archives or 01/27/09 news, 09012705 for BP summary of DHS' confirmation that 10+2 began as scheduled on January 26, 2009.

See ITT's Online Archives or 11/25/08, 11/26/08, 12/03/08, 12/09/08, 12/10/08, 12/17/08, 12/19/08, 12/22/08, and 12/23/08 news, 08112505, 08112605, 08120305, 08120905, 08121010, 08121710, 08121905, 08122205, and 08122310, for Parts I-IX on the details of CBP's 10+2 interim final rule.

See ITT's Online Archives or 01/15/08 news, 09011505, for BP summary of CBP's discussion, clarification of its 10+2 interim final rule in which CBP announced that FAQs would be forthcoming.)

CBP's 10+2 FAQs (dated 01/23/09) available at http://www.cbp.gov/linkhandler/cgov/trade/cargo_security/carriers/security_filing/10_2faq.ctt/10_2faq.doc.